PIF maps out plans to boost Saudi private sector

March 14, 2023, 3:24 PM

Yasir Othman Al-Rumayyan, governor of the Saudi Public Investment Fund. Forty percent of the $11trn held by sovereign wealth funds is in the Gulf region — Yasir Othman Al-Rumayyan, governor of Saudi Arabia's Public Investment Fund. Some 40% of the $11trn held by sovereign wealth funds is in the Gulf region

‘Musahama’ scheme to grow local spend in portfolio
Plans to upskill local suppliers and vendors through ‘boot camps’
Kingdom’s private sector to account for 65% of GDP by 2030

Saudi Arabia’s Public Investment Fund has launched a package of initiatives aimed at increasing involvement by local businesses in its portfolio activities.

The three moves announced on Tuesday include the official launch of PIF’s Local Content Growth programme – known as Musahama – which aims to increase the share of local spend in the sovereign wealth fund’s domestic portfolio to 60 percent by 2025.

Ramping up involvement by local firms in its companies’ supply chains is one example of how this could work, PIF said.

The other two initiatives are a Suppliers Development Programme, to support the upskilling of local suppliers and vendors so they can meet the needs of PIF companies, and the creation of a Private Sector Hub that updates businesses on supplier and investment opportunities offered by PIF and its companies.

The announcement was made at PIF’s inaugural Private Sector Forum in Riyadh. It is part of the kingdom’s Vision 2030 ambition to grow the contribution of its private sector to 65 percent of GDP, from 40 percent today.

As one of the world’s largest sovereign wealth funds with around $620 billion of assets under management, PIF is at the centre of Vision 2030 efforts to diversify the Saudi economy and reduce its dependence on hydrocarbons.

The fund is diversifying its investments to grow its asset base to more than $1 trillion by 2025. Developing the kingdom’s private sector by increasing “local content” in its own portfolio is viewed as an important bi-product of this.

PIF Riyadh — The PIF announcement was made at its Private Sector Forum in Riyadh. Picture: Reuters

Last month PIF invested $1.3 billion in four domestic contractors, taking “significant minority stakes” in Nesma & Partners Contracting Company, El Seif Engineering Contracting Company, Al Bawani Holding Company and Almabani General Contractors Company, it said.

The investment is intended to strengthen local supply chains and stimulate growth of the domestic contracting sector.

But with PIF’s activities spanning multiple industries including construction, mining, technology, hospitality, banking, food and more, there are plenty of opportunities for local firms to get involved, it added today.

Under Musahama PIF companies will “embed local content considerations in their design decisions and procurement processes”, to encourage the uptake of local products and services.

The Suppliers Development Programme will hold “boot camps” to help contractors prepare for qualification as vendors.

The Private Sector Hub is now live and contains more than 100 opportunities, according to PIF.

Jerry Todd, head of PIF’s national development division, said the programmes would “contribute directly towards developing local industries and building long-term supplier and vendor partnerships, strengthening local capabilities, enhancing the competitiveness of local players, improving supply chain resilience, and stimulating innovation in the Saudi economy”.